544 U.S. 460 (2005), argued 7 Dec. 2004, decided 16 May 2005 by vote of 5 to 4; Kennedy for the Court, Stevens and Thomas in dissent. New York and Michigan prohibited out-of-state, but not in-state, alcohol producers from selling directly to in-state consumers. Producers argued that this violated the dormant Commerce Clause doctrine's ban on discrimination against out-of-state goods. The two states claimed their laws were authorized by the Twenty-first Amendment, which trumped the dormant Commerce Clause doctrine. The Court rejected this view and invalidated the laws.
The opinion began with a review of the Wilson and Webb-Kenyon acts, which were early congressional responses to the Court's reliance on the dormant commerce power to invalidate state liquor regulations. These acts authorized states to enforce their own liquor laws free from the strictures of the dormant Commerce Clause. Justice Anthony M. Kennedy concluded that both acts affirmed “the Court's line of … cases striking down state laws that discriminated against liquor produced out of state” (p. 483), even though they removed barriers to nondiscriminatory laws held to “directly regulate” interstate commerce. The Twenty-first Amendment, Kennedy noted, was not intended to “give States the authority to pass nonuniform laws in order to discriminate against out-of-state goods” (pp. 484–485).
The Court distinguished earlier cases that upheld laws similar to New York's and Michigan's. These laws, the Court noted, were passed immediately after the Twenty-first Amendment's ratification and did not involve the kind of discrimination present in the New York and Michigan laws at issue in Granholm. Moreover, the Court concluded, those early cases were inconsistent with more recent cases, such as Bacchus Imports, Ltd. v. Dias (1984), which “confirm[ed] that the Twenty-first Amendment … does not displace the rule that States may not give a discriminatory preference to their own producers” (p. 486).
The Court rejected arguments that the direct shipment ban enabled states to police underage drinking and ensure the orderly collection of state taxes. “The States produce little evidence,” the Court wrote, “that the purchase of wine over the Internet by minors is a problem” (p. 490), citing a Federal Trade Commission report suggesting the opposite was true. Nor was the Court persuaded that discrimination was necessary to address tax collection concerns.
In the principal dissent, Justice Clarence Thomas criticized the majority for misapprehending the import of the Wilson and Webb-Kenyon acts and for disregarding earlier cases with nearly identical facts, in which the Court interpreted the amendment to permit discrimination. Thomas argued that “the Webb-Kenyon Act overturned not only [cases barring nondiscriminatory state regulations] but also [cases involving the] ‘nondiscrimination’ principle” (p. 503). Thomas further argued that the plain meaning of Section 2 of the Twenty-first Amendment permitted the laws struck down by the majority.
Bacchus Imports, he complained was “unpersuasive” and “swept aside the weighty authority of this Court's early Twenty-first Amendment case law” (p. 524), substituting instead a test that only regulations dealing with the amendment's “core concerns,” such as temperance, fell within the scope of the amendment. Given the early Court decisions supporting even discriminatory state laws governing imports of alcoholic beverages into the states, Thomas would have upheld the challenged laws.